Tuesday, July 4, 2017

Warren Buffett's Wingman

Charlie Munger is the "junior" partner at Berkshire-Hathaway (Mr. Buffett's company), but he knows investing and knows what makes capitalism work. He's got three truckloads of useful knowledge stored in his head on these subjects, and isn't shy about sharing them.

One takeaway regarding the 2008-2009 meltdown? Simply this:

[The country] went way too far in financial de-regulation. People were making so much money and the economy was doing so well because it was being puffed up by this idiot boom and idiot expansion of consumer credit, that everyone thought, "Oh, isn't this wonderful?"

Your life for the next three weeks would be very pleasant if you went on heroin. But it would totally destroy you over the long pull. And that's what the economy does when it allows itself to be seduced by the potential for an idiot boom ... and to allowing all this gross immorality and craziness to take over.

The man does not keep his opinions hidden under a bushel basket. It's interesting that Charlie Munger calls de-regulated markets immoral and crazy. (What kind of Republican IS he, anyway??) Also interesting that he points to the fact that markets drop like stones every so often, and that truly effective investors have the fortitude to ride the declines out.

Both he and Warren advocate buy-and-hold investment strategies. Both of them know that, with investing, patience isn't just a virtue, it's a necessity.